What's Happening?
CAE's defence and security division reported a 14% increase in revenue for the second quarter of fiscal 2026, reaching C$566.6 million. Despite a significant decline in order intake, the division's operating income rose to C$46.6 million, accounting for 8.2%
of the group's revenue. The adjusted backlog decreased slightly to C$11.2 billion. The book-to-sales ratio stood at 0.98 for the quarter. CAE's overall revenue increased by 9% to C$1.24 billion. The company anticipates continued growth in the defence segment, supported by increased defence budgets among NATO and allied countries.
Why It's Important?
The revenue growth in CAE's defence division highlights the company's resilience and ability to capitalize on increased defence spending. The decline in order intake suggests potential challenges in securing new contracts, but the strong backlog provides a buffer for future operations. The company's focus on generational defence investments in the US, Canada, and Europe positions it well for long-term growth. This development is crucial for stakeholders and investors looking for stability and growth in the defence sector.
What's Next?
CAE's management expects continued growth and profitability in the defence segment, forecasting low double-digit annual growth in adjusted segment operating income. The company plans to leverage increased defence budgets and record aircraft backlogs to drive higher returns and stronger cash flow. Stakeholders will be monitoring CAE's ability to convert its pipeline of pending bids into secured contracts and maintain its growth trajectory.
